Vodafone Group Plc Annual Report for the year ended 31 March 2012

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Vodafone Group Plc Annual Report 2012 48 Operating results (continued) EBITDA increased by 8.0% * with the EBITDA margin increasing by 0.7 percentage points, reflecting higher service revenue partially offset by higher customer acquisition and retention costs. Other Europe Service revenue increased by 0.5% * with growth in Turkey and the Netherlands being partially offset by declines in other markets due to the challenging economic environment and intense competitive factors. In Turkey service revenue grew by 28.9% * driven by strong growth in both data and voice revenue, despite a 52% cut in MTRs effective from 1 April 2010. In Greece service revenue declined by 19.4% * with intense competition driving a reduction in prepaid revenue and economic factors leading to customer tariff optimisation. EBITDA declined by 2.4% * , with declines in all markets except Turkey and the Netherlands, due primarily to lower service revenue and higher acquisition and retention costs partially offset by operating cost efficiencies. Africa, Middle East and Asia Pacific India £m Vodacom £m Other £m Eliminations £m Africa, Middle East and Asia Pacific £m % change £m Organic 1 Year ended 31 March 2011 Revenue 3,855 5,479 3,971 (1) 13,304 20.0 9.5 Service revenue 3,804 4,839 3,650 (1) 12,292 20.0 9.5 EBITDA 985 1,844 1,170 – 3,999 20.7 7.5 Adjusted operating profit 15 827 430 – 1,272 55.5 8.6 EBITDA margin 25.6% 33.7% 29.5% 30.1% Year ended 31 March 2010 Revenue 3,114 4,450 3,526 (1) 11,089 Service revenue 3,069 3,954 3,224 (1) 10,246 EBITDA 807 1,528 977 – 3,312 Adjusted operating (loss)/profit (37) 520 335 – 818 EBITDA margin 25.9% 34.3% 27.7% 29.9% Note: 1 Organic growth includes Vodacom at the 2011 level of ownership and excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. Revenue grew by 20.0% with an 8.5 percentage point benefit from foreign exchange rate movements and the full year impact of the consolidation of Vodacom results from 18 May 2009 partially offset by the impact of the creation of the Vodafone Hutchison Australia (‘VHA’) joint venture on 9 June 2009. On an organic basis service revenue grew by 9.5% * despite the impact of MTR reductions and difficult economic environments. The growth was driven by a strong performance in India and continued growth from Vodacom and the rest of the region, other than Egypt where performance was impacted by the socio-political unrest during the fourth quarter of the 2011 financial year. EBITDA grew by 20.8% with foreign exchange rate movements contributing 8.0 percentage points of growth. On an organic basis EBITDA grew by 7.5% * driven primarily by growth in India, together with improvements in Vodacom, Ghana, Qatar and New Zealand, partially offset by a decline in Egypt following pricing pressure and socio-political unrest. Organic change % M&A activity pps Foreign exchange pps Reported change % Revenue – Africa, Middle East and Asia Pacific 9.5 2.0 8.5 20.0 Service revenue India 16.2 – 7.7 23.9 Vodacom 5.8 6.7 9.9 22.4 Other Africa, Middle East and Asia Pacific 7.2 (0.9) 6.9 13.2 Africa, Middle East and Asia Pacific 9.5 2.2 8.3 20.0 EBITDA India 15.1 – 7.0 22.1 Vodacom 4.9 4.9 10.9 20.7 Other Africa, Middle East and Asia Pacific 5.1 10.6 4.1 19.8 Africa, Middle East and Asia Pacific 7.5 5.3 8.0 20.8 Adjusted operating profit India 134.0 – 6.5 140.5 Vodacom 5.7 38.2 15.1 59.0 Other Africa, Middle East and Asia Pacific 2.2 29.2 (3.0) 28.4 Africa, Middle East and Asia Pacific 8.6 39.9 7.0 55.5
Vodafone Group Plc Annual Report 2012 49 India Service revenue grew by 16.2% * including a 1.7 * percentage point benefit from Indus Towers, the Group’s network sharing joint venture. Growth was driven by a 39.0% increase in the average mobile customer base and stable usage per customer trends, partially offset by a fall in the effective rate per minute due to an increase in the penetration of lower priced tariffs into the customer base and strong competition in the market. February 2011 saw the launch of commercial 3G services following the purchase of 3G spectrum in May 2010 and subsequent network build. By 31 March 2011 1.5 million customers had activated their 3G access. EBITDA grew by 15.1% * driven by the increase in the customer base and economies of scale which absorbed pricing and cost pressures. Vodacom Service revenue grew by 5.8% * driven by South Africa where growth in data revenue of 35.9% * 1 offset a decline in voice revenue caused by MTR cuts effective from 1 March 2010 and 1 March 2011. In South Africa data revenue growth was driven by a 48.9% * increase in data usage due to strong growth in mobile connect cards and smartphones. In addition, successful commercial activity, particularly in off-peak periods, drove higher voice usage during the 2011 financial year which partially offset the impact of MTR cuts. Net customer additions returned to pre-registration levels for the first time in the third quarter of the 2011 financial year, with the trend continuing during the fourth quarter of the 2011 financial year with net additions of 1.2 million. In Vodacom’s operations outside South Africa service revenue growth continued with strong performances from Tanzania and Mozambique. Trading conditions remain challenging in the Democratic Republic of Congo and the Gateway operations. EBITDA grew by 4.9% * driven by the increase in service revenue, strong handset sales and lower interconnection costs, partially offset by higher operating expenses. On 1 April 2011 Vodacom refreshed its branding to more closely align with that of the Group. Other Africa, Middle East and Asia Pacific Service revenue grew by 7.2% * with growth across all markets except Egypt. In Qatar the customer base reached 757,000 by 31 March 2011, with 45% of the population actively using Vodafone services. The decline in Egypt service revenue was driven by a combination of MTR reductions, competitive pressure on pricing and socio-political unrest during the fourth quarter of the 2011 financial year, offset in part by strong customer and data revenue growth during the year. In Ghana service revenue growth of 21.0% * was supported by competitive tariffs and improved brand awareness. VHA integration remained on track and a number of important initiatives were completed during the 2011 financial year to begin realising the benefits of the merger. Contact centre operations were consolidated into two major centres in Hobart and Mumbai India, substantial progress was made in the consolidation of the retail footprint, and a major refit of retail stores was underway. VHA appointed new suppliers for network managed services, core, transmission and IT managed services. EBITDA increased by 5.1% * driven by growth in Ghana, New Zealand and Qatar partially offset by a decline in Egypt resulting primarily from the lower effective price per minute but also impacted by the socio-political unrest during the fourth quarter of the 2011 financial year. Note: 1 Data revenue in South Africa grew by 41.8% * . Excluding the impact of reclassifications between messaging and data revenue during the year, data revenue grew by 35.9% * . Non-Controlled Interests Verizon Wireless 2 3 4 2011 £m 2010 £m % change £ Organic Service revenue 17,238 15,898 8.4 5.8 Revenue 18,711 17,222 8.6 6.0 EBITDA 7,313 6,689 9.3 6.7 Interest (261) (298) (12.4) Tax 3 (235) (205) 14.6 Group’s share of result in Verizon Wireless 4,569 4,112 11.1 8.5 In the United States Verizon Wireless reported 2.6 million net mobile customer additions bringing its mobile customer base to 88.4 million at 31 March 2011, a 3.1% increase. Customer growth improved in the fourth quarter of the 2011 financial year following the launch of the iPhone 4 on the Verizon Wireless network in February 2011. Service revenue growth of 5.8% * was driven by the expanding customer base and robust data revenue primarily derived from growth in the penetration of smartphones. The EBITDA margin remained strong despite the competitive challenges and economic environment. Efficiencies in operating expenses and lower customer acquisition costs resulting from lower volumes were partly offset by a higher level of customer retention costs reflecting the increased demand for smartphones. As part of the regulatory approval for the Alltel acquisition, Verizon Wireless was required to divest overlapping properties in 105 markets. On 26 April 2010 Verizon Wireless completed the sale of network and licence assets in 26 markets, encompassing 0.9 million customers, to Atlantic Tele-Network for US$0.2 billion. On 22 June 2010 Verizon Wireless completed the sale of network assets and mobile licences in the remaining 79 markets to AT&T Mobility for US$2.4 billion. As a result the Verizon Wireless customer base reduced by approximately 2.1 million net customers on a 100% basis, partially offset by certain adjustments in relation to the Alltel acquisition. On 23 August 2010 Verizon Wireless acquired a spectrum licence, network assets and related customers in southwest Mississippi and in Louisiana, formerly owned by Centennial Communications Corporation, from AT&T Inc. for cash consideration of US$0.2 billion. This acquisition was made to enhance Verizon Wireless’ network coverage in these two locations. Verizon Wireless’ net debt at 31 March 2011 totalled US$9.8 billion 5 (31 March 2010: US$22.6 billion 5 ). Notes: 2 All amounts represent the Group’s share based on its 45% equity interest, unless otherwise stated. 3 The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities held by the Verizon Wireless partnership and certain state taxes which are levied on the partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is included within the Group tax charge. 4 Organic growth rates include the impact of a non-cash revenue adjustment which was recorded by Verizon Wireless to defer previously recognised data revenue that will be earned and recognised in future periods. Excluding this the equivalent organic growth rates for service revenue, revenue, EBITDA and the Group’s share of result in Verizon Wireless would have been 6.4% * , 6.6% * , 8.2% * and 10.8% * respectively. 5 Net debt excludes pending credit card receipts. Comparatives are presented on a comparable basis. Business review Performance Governance Financials Additional information
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Shareholder information Vodafone Gr
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History and development Vodafone Gr
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Form 20-F cross reference guide Vod
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Vodafone Group Plc Annual Report for the year ended 31 March 2012

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